Record Large 10Y Auction Sees Stellar Demand, First Stop-Through In 12 Months


Today’s 10Y auction was set to make history: the February refunding auction would sell $42BN in debt maturing on Feb 15, 2034, the largest amount ever for a 10 Year auction…

… and after yesterday’s mediocre 3Y refunding, there were some concerns that the sheer size of today’s issuance could lead to severe market indigestion.

Those fears proved to be unfounded because moments ago the Treasury announced that the record amount of 10Y debt sold in a very strong auction, which priced at a high yield of 4.093%, up from 4.024% last month but stopped 1.2bps through the 4.105% When Issued. That was the first stop through for 10Y paper in a year, or since February, excluding the on the screws Sept 23 auction.

The bid to cover was also solid, and at 2.56 it was above the 2.52 six-auction average if below last month’s 2.56, which in turn was the highest since Feb 2023.

The internal were even better, with Indirects awarded 70.1, the highest since last August, and solidly above last month’s 66.1. And with Directs taking just 16.1%, the lowest since February 2023, that meant Dealers were left holding 13.0% of the auction the lowest since August.

Overall, this was a stellar auction which came at a convenient time: just when the Treasury is flooding the market with record debt amounts which the Biden admin needs to fund the next 10 months of generous fiscal stimmies ahead of the November election.

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